Congressional efforts to cut the deficit by socking the U.S. Postal Service with an unexpected $1.7 billion in retirement and health insurance costs could lead to serious disruptions in mail service, postal officials charged yesterday.
The Senate proposes to implement part of the deficit-cutting agreement signed last month by requiring the semi-independent Postal Service to absorb -- without raising rates -- some retirement and insurance costs now borne by the taxpayers, aides said.
The deficit-reduction proposal that is expected to be presented to the Senate today is designed to yield $827 million in fiscal 1988 and $931 million in 1989 from the Postal Service. The post office would have to do it without increasing borrowing, its operating budget or postal rates, according to the proposal.
The Office of Management and Budget pressed for language to force the Postal Service to swallow the $1.7 billion without raising rates, sources said. OMB scuttled a earlier proposal affecting the post office that would have almost certainly led to an increase in the price of a stamp.
A three-cent increase, to 25 cents, in the price of a first-class stamp is already pending.
Postal Board Chairman John N. Griesemer attacked OMB yesterday in a statement, saying that "it has no responsibility at all for the kind of mail service that this country receives."
Griesemer said the Senate proposal would require that roughly half the $1.7 billion come from the operating budget -- "largely wages for employes to sort and deliver the mail" and half from "funds needed to replace obsolescent buildings and vehicles and bring in high-speed automated processing equipment."
If Congress determines that the Postal Service should pay more of the cost of retirement benefits, the way to do it is by carefully balancing service needs against necessary rate adjustments, he said.
Postal officials said the detailed provisions of the agreement put in at the insistence of OMB threaten to violate the spirit of the law that established the Postal Service as a semi-independent corporation in 1970.
The Postal Service's operating budget is $31 billion, according to spokesman Jim Van Loozen, of which $29 billion comes from rates. Roughly 83 cents of every dollar goes for personnel compensation and benefits, he said. Another 8.19 cents of every dollar goes for transportation costs.
The post office has proposed to spend $2.36 billion for capital improvements in fiscal 1988 and $2.63 billion in 1989. Of this, $1.7 billion is allocated to new buildings this fiscal year, and $1.3 billion the next.
The much-discussed automation project to increase the speed and efficiency of mail processing is expected to cost $238 million this year and $910 million the next. New vehicles are budgeted for $25 million and $142 million, respectively.
Postal officials said cuts in the capital budget would jeopardize efforts to improve mail service in Northern Virginia, Manhattan and Chicago, three areas where service has been lagging.
Under congressional rules, the Senate must first pass its version of the bill implementing the summit agreement, followed by the House. Some congressional aides expressed doubt that the House would support what they described as "micromanaging" the post office.
The Senate proposal also calls for:
Granting a 2 percent pay increase to federal employes.
Barring members of Congress from receiving a salary increase.
Allowing top federal officials to receive the 2 percent raises -- severing the traditional link between congressional salaries and executive branch pay.
Paying the seniority increases due about 40 percent of civilian employes this year.
Leaving untouched the rules governing retirement contribution withdrawals when a worker leaves the government.
The final two items were early targets for obtaining the needed $1.7 billion in "personnel reforms" called for in the agreement. But they were abandoned when it was discovered they wouldn't save enough money.
In related action, the Senate Appropriations Committee reported out a $606 billion omnibus spending bill that contains $7.6 billion in defense and domestic spending cuts and which is designed to implement part of the Nov. 20 budget accord reached by the Reagan administration and congressional leaders. That accord calls for a $30.2 billion reduction in the deficit this fiscal year.
In approving the catchall spending measure that will fund most government operations through Oct. 1, the committee stripped out numerous extraneous provisions added last week by the House. In response to a leadership request for a clean bill, the committee voted not to add amendments.
However, when the measure goes to the full Senate later this week, it is expected that amendments will be offered, including one that would provide additional aid to the Nicaraguan contras.Staff writer Tom Kenworthy contributed to this report.